A pension plan under which a participant"s account is credited by a company using a set percent of her or his annual compensation plus interest costs. A cash balance pension plan is a defined-benefit strategy. Therefore, the strategy"s financing limits, capital demands and investment risk derive from defined-benefit conditions: as changes in the portfolio don"t influence the ultimate benefits to be received by the participant upon retirement or termination, the organization only bears all possession of profits and losses in the portfolio.